What Is Car Replacement Cost?

Car replacement cost can refer to the amount needed to repair or replace a vehicle due to an accident or theft. However, the amount of money offered by the carrier when a car is a total loss is usually the market value of the vehicle, not the actual cost to fix or replace it.  

How replacement costs are calculated

It’s important to note that car replacement costs are usually different from the actual cash value (ACV) of your vehicle. ACV may refer to the current market value of your vehicle, minus depreciation. Replacement costs tend to mean the cost of replacing your vehicle with a new equivalent without including depreciation.  

There can be many elements that affect car replacement costs. Depending on the insurance carrier, these elements can include:

  • Market price: Insurance carriers may consider the current market price for the vehicle and its parts
  • Labor costs: Carriers may review potential labor costs to repair the vehicle.
  • Location: Where you live can affect the overall costs of the repair.
  • Type of vehicle: The type of vehicle you have may affect the replacement costs.
  • Age of vehicle: How old your vehicle is can affect costs.  

Why car replacement costs matter

For policyholders, understanding your car replacement costs may be important. This can help you anticipate how your vehicle is replaced after an accident or theft. If your carrier can offer you a car replacement cost rather than ACV, you may be able to get a comparable vehicle replacement without depreciation.  

Learn more about policy options

Infinity Insurance Agency, Inc. (IIA) works with various insurance carriers. We can help you find a personal auto insurance policy that suits your unique needs. Get a free online quote today or call 1-855-478-3705 to speak with our Spanish bilingual team.  

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